European watchdogs could cause delay on Nokia patent mining

As we embark on the final weeks of 2013, Nokia Corp is in the news yet again for claims of patent trolling. Europe’s antitrust regulator is keeping a close eye on the smartphone manufacturer as it prepares to finalize the sale of its handset business to Microsoft. According to a Wall Street Journal report, the vice president of Europe's competition authority said regulators wouldn't tolerate the Finnish company behaving like a "patent troll." The watchdog is concerned that once the sale is made, the Finns will have an incentive to mine profits from its portfolio of more than 30,000 patents.

Nokia generated a total of $643 million in revenue from its 40 patent licensees last year, which could account for more than 30 percent of Nokia's operating profit next year and with Nokia's shares still up 88 percent since the Microsoft deal in September, the anticipation is that the patents business will only continue to expand.

Only about 10 percent of Nokia's portfolio is licensed, whereas most wireless industry licensing revenues relate to such patents currently, according to WSJ. Still, Nokia makes about a 0.2 percent royalty rate on the average selling price of each device containing its technology. Nokia could stand to reach a 0.75 percent royalty rate as it renegotiates existing deals and signs new ones.

Building a licensing business will take time, since analysts say receiving full value from Nokia's patents will take five years, however, once the business takes off Nokia is set to gain significantly.

Just this month, Nokia officially won a key ruling in the U.K. against HTC over charges of patent infringement on a number of HTC’s Android-based handsets, including the best-selling HTC One. A judge determined that these devices infringe on a patent held by Nokia related to a modular structure for a transmitter and a mobile station, or the way in which frequency is carried through the mobile devices. This is the first win among additional cases for the same suit in other countries that have yet to be finalized.

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